If you are one of the buyers holding off the last few years of housing appreciation, then the news that the Valley housing seems to be immune to Covid-19 is not good. But no worries, today’s low rates are wiping away years of appreciation in the housing market nation wide.
THE MARKET DATA YOU READ IS ALREADY OUTDATED
Timing is everything in the real estate market. And if you’re curious about the market, by the time you read the newspapers or economic websites, the market has already changed.
CONTRACTS ARE UP 65% OVER THE LAST 6 WEEKS
During the 6 week period from the beginning of the coronavirus shutdown to mid April, contract activity in the valley dropped 39%. You may begin to see news stories about a decline in sales – because most escrows take 30 – 45 days to close. This drop-in activity is old news. What’s not getting reported – yet – is the
49% 65% increase in accepted contracts over the last 5 weeks (this 49% jumped to 65% in the week that elapsed between today and when I recorded my share-screen charts (link at end of this blog). THAT’S WHAT I’M TALKING ABOUT
BUYERS may be MISSING THE OPPORTUNITY
This is all key information for buyers right now, especially if they’re on the fence waiting for the market to “crash”. This increase in buyer demand will not be widely reported for another month because these contracts still need to close.
One mistake buyers make is waiting for closing reports before acting. By the time a property closes escrow and the sales price is publicly recorded, the conditions that the transaction was created under may have already passed.
BUYERS LOOKING AT AVERAGE PRICED VALLEY HOMES
Because I watch real time data, I can assure you that contract activity is up across all price points in Greater Phoenix, but the average list price per square foot is only down on contracts over $500K. (more on the luxury market separately, and specifically Paradise Valley).
All other price points below $500K are seeing the average list price per square foot either higher than or equivalent to where it was 10 weeks ago in February. SO, those buyers waiting for sale prices to decline are truly missing out.
YOU CAN PAY LESS NOW FOR THE SAME HOME YOU WANTED IN 2016
Mortgage rates have declined while the median sales price rose 8.9% over last year (more than double the national average, full Phoenix Business Journal) but it works it to a net gain for buyers. The principal and interest payment on a $300K, 30-year, fixed-rate mortgage went from $1,450/month to $1,307/month. That’s down a 10% decline over the course of a year.
Here’s a cool example: If you factor in housing appreciation on a home purchase of $330k, today’s low mortgage rates would give you a payment around $1,300/mo… while back in 2016 that house would have cost around $324k, but your payment would have been around $1,854/month.
Today’s Low Mortgage Rates, is a Temporary Phenomenon
WE ARE NOT SEEING ANY SIGNIFICANT PRICE DROPS
The drop in market activity has impacted seller’s only slightly. We’re not seeing significant price drops but we are seeing sellers making more concessions to buyers with the percentage of homes closing with seller-assisted closing costs, increasing from 18% to 25% over the last 4 weeks.
To see the charts that accompany this information, click here.
About the Author: Denise van den Bossche has been a licensed Agent and homeowner for over 35 years in the Metro-Phoenix Scottsdale Valley of the Sun. A Legacy LEED® AP, designated SRES, DMX, ePro, EcoBroker and co-founder of Seniors Advisors Advising Seniors®, a consortium of experts to surround and support families facing aging or chronic illness. To request a no-obligation market report, home evaluation, or consumer guide on your specific needs, contact Denise at 602.980.0737 or email Denise@AZMultipleListingService.com. Denise’s husband Patrick is President of Realty Executives International, with 500 offices throughout North America.
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